106 Cal. 514 | Cal. | 1895
Action to quiet title. The appeal is from the judgment and from the order denying a new trial.
On the twenty-second day of May, 1868, Denis Ma-honey, the then owner of the lands in controversy, was indebted to the Savings and Loan Society in the sum of $20,000, gold coin of the United States, for moneys borrowed. Upon that date he executed, as party of the first part, a deed of trust to Burr and Dean as parties of the second part; the Savings and Loan Society, as party of the third part, was the beneficiary of the trust, which was for the following declared purposes:
“ To secure the payment to the party of the third part of said indebtedness, and all further indebtedness of the party of the first part to the party of the third part that may be contracted during the continuance of this trust, not exceeding $35,000 at any one time, whether evidenced by promissory note or otherwise, whether for interest, insurance, or for moneys expended in and about said premises for repairs, taxes, liens, or encumbrances.” The parties of the second part and the party of the third part, their successors and assigns, are expressly authorized to pay all taxes, assessments, and liens then subsisting, or which might afterward be imposed, upon the premises, to keep the buildings on said premises insured against loss by lire, and to make such repairs and improvements on said buildings as to them may seem best. “ These trusts shall continue,” declares the instrument, “as security to the party of the third part and its assigns for the repayment in gold coin*524 of the United States of the moneys so borrowed and received by the party of the first part, and the interest and premiums thereon, and of all amounts so paid out as aforesaid, .... and for the repayment in like gold coin of all moneys that may be hereafter loaned and advanced, and all sums of money, with interest thereon, due or to become due from the said party of the first part to said Savings and Loan Society, or their assigns, or to said trustees, whether the same be evidenced by promissory notes or otherwise, and all accruing accounts and balances, together with the reasonable expenses of this trust, and $2,000 in gold coin of the United States as counsel fees, which shall become due and payable by the party of the first part to the parties of the second part immediately upon any default made or suffered by the party of the first part in any of the payments aforesaid.” The instrument next provides for a reconveyance to Mahoney, his heirs and assigns, upon payment at maturity, and upon demand of all moneys advanced, laid out, and expended under and in pursuance of the trust, with interest. It is then provided that in case of default, upon demand of the party of the third part, it shall be lawful for the parties of the second part “ to sell the above-granted premises, or such part thereof as, in their discretion, they shall find it necessary to sell in order to accomplish the objects of these trusts, in the manner following, namely.” It is further provided that after publication, and on the day of sale so advertised by publication, or upon the day to which the sale may be postponed, “they may sell the property so advertised, or any portion thereof, at public auction to the highest cash bidder.” The Savings and Loan Society was authorized to bid and purchase at the sale, and the parties of the second part were to execute to the purchaser or purchasers a deed of conveyance of grant, bargain, and sale of the aforegranted premises. Out of the proceeds of the sale the party of the third part was to be reimbursed, costs and expenses of the sale and counsel fees were to be retained, and the balance or surplus, if any,*525 paid over to Denis Mahoney, his heirs or assigns. The instrument finally declares that the recitals given in such deed to the purchaser shall be conclusive proof of the default and due publication of notice, and the deed with such recitals shall be effectual and conclusive against the party of the first part, his heirs and assigns, and all other persons.
On the sixth day of March, 1869, Denis Mahoney executed to John M. Burnett a deed of trust, whereby and wherein he “granted, bargained, sold, aliened, released, and conveyed the land in controversy to Burnett, upon trust, to receive the issues, rents, and profits of said premises, and apply the same, or such portion thereof as shall be necessary, for the support, maintenance, and education of the nine children of said Denis Mahoney, and to convey to the survivors of them, upon the youngest attaining his majority, equal, undivided portions thereof.” This instrument further provides: “ And in case it should become advisable, in the judgment of the said Denis Mahoney and Burnett, to make improvements upon said property, the said trustee is hereby authorized to raise money by mortgage or otherwise on said property, or such part thereof as may be necessary for that purpose, and to pay the same, and all charges and interest thereon, out of the rents and profits of the whole of said property, after the application of so much thereof as may be necessary for the support, maintenance, and education of said children.” This instrument was duly recorded upon the eighth day of March, 1869, and, “ from and after the recording thereof, plaintiff and Burr and Dean had full knowledge of said deed and its contents.”
Sundry sums of money were expended by the Savings and Loan Society to release the property from liens of taxes and street assessments, other sums for insurance, still others for the improvement of the property. All of these sums were moneys which it was authorized to expend, and no expenditure was made upon the property not contemplated by and included within the terms of
“ On the twenty-fifth day of May, 1871, money was required for the purposes of said property, and for making repairs and additions to the buildings and improvements thereon, and, on the fifth day of March, 1872, additional money was required for the purpose of protecting said land and improvements and paying certain street assessments theretofore imposed and levied, and which were then a charge and lien thereon, and plaintiff loaned and advanced said further sums of money to be used, and which were used, for the purposes aforesaid, to wit, on said twenty-fifth day of May, 1871, the sum of $500, and on said fifth day of March, 1872, the sum of $650.” On these dates Denis Mahoney and John M. Burnett, “ claiming to act as trustee,” executed and delivered to plaintiff their promissory notes for these amounts. Burnett signed as trustee of the Mahoney estate. Each of these notes was declared by the makers to be secured by the deed of trust executed by Mahoney to Burr and Dean.
On November 13, 1873, there had been paid of the original indebtedness of $20,000 all but $2,000. There were likewise due and owing to the bank the two promissory notes above mentioned, and certain sums paid for taxes upon the property. More money was required on the thirteenth day of November, 1873, by Mahoney and Burnett, “ for the purpose of protecting said property and paying certain street assessments which had been imposed upon it, and which were then a charge and a lien upon it.” Mahoney and Burnett, as trustee, were without funds to pay such assessment, and on said thirteenth day of November, 1873, the plaintiff, at the instance and request of said Mahoney, with the knowledge and concurrence and at the request of Burnett, claiming to act as trustee, loaned and advanced the full sum of $249 in gold coin, “ with which to pay, and which was used to pay, such street assessments, and to discharge the lien thereof
The quotations are from the findings.
1. The deed from Mahoney to Burr and Dean is not a mortgage, but a deed of trust. The decisions of this court upon such instruments have never been in flux; but, to the contrary, have been set and consistent since first they came before it. Moreover, this precise form of deed has upon more than one occasion been construed and upheld. (Koch v. Briggs, 14 Cal. 262; 73 Am. Dec. 651; Thompson v. McKay, 41 Cal. 221; Fuquay v. Stickney, 41 Cal. 587; Whitmore v. San Francisco Savings Union, 50 Cal. 149; Grant v. Burr, 54 Cal. 300; Bateman v. Burr, 57 Cal. 480; Durkin v. Burr, 60 Cal. 360; Savings & Loan Soc. v. Deering, 66 Cal. 281; Partridge v. Shepard, 71 Cal. 477; More v. Calkins, 95 Cal. 435; 29 Am. St. Rep. 128.) It transferred the legal title to the trustees, while Mahoney retained the right to a reconveyance upon payment, and to a sale as provided in case of default. Nothing in Powell v. Patison, 100 Cal. 235, can be construed as militating against the interpretation which has thus invariably been given. Moreover, in that case the instrument under consideration was not brought up for review.
2. The trial court, regarding the transaction of November 13, 1873, found that the note for $4,565, made by Mahoney and Burnett, “ was taken and received by the Savings and Loan Society in payment and satisfaction and extinguishment of all sums of money then due it by Mahoney or Burnett, and of all claims and demands which it then had against said Mahoney and Burnett, or
The finding is attacked as wholly unsupported by the evidence. By respondents it is contended that there is at least a conflict of evidence, and that under the rule it will not be disturbed. The evidence said to raise a conflict is the presumption that an obligation delivered up to a debtor has been paid, that the ordinary course of business has been followed (Code Civ. Proc., sec. 1963, subds. 9, 20), and the circumstances of the cancellation and surrender of the $20,000 note, the satisfaction and cancellation of it upon the books of the bank, and the taking of the new note, to which Burnett affixed his signature as joint maker with Mahoney. Appellant claims that there is no evidence to support the finding that the note was entered as satisfied and canceled upon the books of the bank. There is no direct evidence to that effect. The books of the bank were not introduced, and that part of the finding, if it has support, must derive it from the inference drawn from the fact of delivery and its circumstances—a deduction from this fact warranted by the course of business. (Code Civ. Proc., sec. 1960, subd. 2.) But disputable inferences or presumptions, while evidence, are evidence the weakest and least satisfactory. They are allowed to stand, not against the
Burnett testifies that he and Mahoney went to the bank for more money; that Burr thought they should “ clear up” the small notes and give a new note for the balance, which was done; that he signed the note as trustee because Burr required it to be done; he (Burr) thought it should be done for the security of the bank.
“ Q,. Now, when you and Mr. Mahoney went to the bank, and this note for $4,565 was executed, it was not for the purpose of paying off the $20,000 note? A. No, sir. Our purpose was, as Mr. Burr expressed it, to clean up these two notes and whatever balance was necessary —to clean up whatever was outstanding there.
“ Q. Well, what was the purpose of your going there? It was not to pay the $20,000 note? A. No, sir.
“ Q. The intent of this note was simply to aggregate the existing amounts in one sum and to evidence the indebtedness by this note. That was the purpose of giving the one note, as you have related, was it not ? A. That was the intention.”
Burr, the other party to the transaction and president of the bank, testified: “ It was at my suggestion that the consolidation was made into this one note; the cashier probably suggested it to me that we had better make it into one note. The consolidation was merely to facilitate the book-keeping of the bank.”
“Q. Under what circumstances was this note for $4,565 made and taken? A. At the exclusive discretion of the president. Not for the purpose of paying any thing, but to consolidate the debt, in the discretion of the president, without reference to the board.”
Such is the unconflicting testimony.
The circumstances of the transaction, it is true, may be used to determine the character of the exchange. But the circumstances, to prevail, must be such as to establish the mutual agreement of the parties. (Hart v. Boller, 15 Serg. & R. 163; 16 Am. Dec. 536; Brown v. Dunckel, 46 Mich. 32.) Here the circumstances, so far from raising a conflict, are in perfect adjustment to the acts and declarations of the parties. Burnett’s evidence shows that he believed that in signing as trustee he was binding the interests of his beneficiaries, as the money was all used for the purposes of the property. The $4,565 note itself declares in terms that it is secured by the bank’s deed of trust. Burnett and Mahoney subsequently asked for postponement of the sale about to be made under the terms of the trust, and by writing again solemnly ratified and confirmed the instrument. Nor, if the rule of knowledge of the law invoked by respondents’ counsel be applied in all rigidity, is the situation of the parties to this transaction altered in the slightest; for if, as counsel contend, the agreement was one
Finally, it may be added that the facts certainly bring the finding within the rule declared in Field v. Shorb, 99 Cal. 662.
3. It is next contended by respondents that the optional payments or advances made by appellant, after it had actual knowledge of Mahoney’s later deed to Burnett, could not be covered by the trust deed; that the sale was for a sum much larger than the amount with which the property was therefor chargeable; that this sum was fixed by appellant in its demand upon the trustees to sell; that appellant was the purchaser, with notice of these facts, and that the sale is, therefore, void.
The rule in this state as to optional advances made
The court found that, from and after the recording of the deed from Mahoney to Burnett, “plaintiff and Burr and Dean had full knowledge of said deed and its contents.” This language is neither apt nor satisfactory. It leaves in uncertainty whether the court meant actual knowledge or the constructive knowledge which follows recordation. Under the latter interpretation it is insufficient. Actual knowledge alone will bind the prior mortgagor. Under the former interpretation the evidence does not support it in all its scope. The deed to Burnett was recorded March 8, 1860. Upon May 25, 1871, Burnett signed the $500 note to appellant as “Trustee of the Mahoney Estate.” Assuming that this signature was sufficient to give the bank actual notice upon that date, no intendment of law to which our attention has been called would operate to throw that notice back more than two years to the date of the recordation of Burnett’s deed; yet the record discloses no other prior actual notice.
However, appellant had actual notice at least as early as May 25,1871, and, as most of the payments or advances were made after that date, the effect of them upon the status of the parties is yet to be determined. The situation on May 25, 1871, taking that as the date of the actual notice, is said by respondents’ counsel to be sufficiently advantageous to support his contention.
Powers of sale under trust deeds or mortgages, it is true, will be strictly construed (Flower v. Elwood, 66 Ill. 449; Sears v. Livermore, 17 Iowa, 297; 85 Am. Dec. 564), and the acts of the trustees in contravention of the trust are void (Civ. Code, sec. 870); but it does not follow that any sale made under such a power is void, or even voidable, because made for an amount greater than the secured debt. In Spencer v. Annan, 4 Minn. 542, relied on by respondents, the amount due was $964.62, and the notice of sale was for $1,606.60. The court said: "We do not hold that it is absolutely necessary to state with certainty the exact amount legally due, for a party under a mistake of law or fact may honestly claim more than by law he would be entitled to, and, if the other party is not shown to be prejudiced thereby, the sale should not be disturbed. The mortgagee may estimate the amount according to the strict terms of the contract, or may err simply in a computation of the interest, and if, under such circumstances, he claims more than he can legally recover, it does not necessarily vitiate the sale. Perhaps any amount within the terms of the contract may in good faith be claimed without affecting the legality of the notice. But we do hold that a party cannot arbitrarily or wantonly claim in his notice a sum which neither the terms of the contract nor any legitimate calculation based thereon will justify.” It was found in that case that the sum claimed exceeded by more than one-half “the amount which any calculation based upon the note would produce,” and, therefore, the sale was set aside as irregular under direct proceedings instituted for that purpose.
In Ormsby v. Tarascon, 3 Litt. 404, also relied upon, the sale was not only for an amount much larger than was due, and for an installment not due, but the circumstances evidenced actual fraud and collusion between the parties to the sale; and “ for this reason,” says the court, “ the sale ought not to be allowed to stand.” In
But, besides these cases cited by counsel, there are others elucidating the true principle. Thus in Ramsey v. Merriam, 6 Minn. 168, the case of Spencer v. Annan, supra, is discussed and distinguished. Any amount within the terms of the security, it is held, may be claimed in the notice, and, if the sale is for an actual excess, “ there are other and more appropriate means of redress” than an action to set aside the sale, viz, an action to recover the surplus. So, in Butterfield v. Farnham, 19 Minn. 85, the amount due was $26,916; the sale was for $34,251, an excess of over $7,000. It was held that, in the absence of fraud or actual injury, the claiming of more than is legally due or stipulated for in the contract cannot affect the validity of the sale. That while a claim, which would necessarily have the effect to deter bidders, would be held fraudulent in law, there is no rule of law by which the claim of such an excess must be held necessarily to have such an effect; and under existing circumstances it cannot be said that it would do so. The doctrine of Spencer v. Annan, supra, is subjected to the modification that, even if the excess be arbitrarily and wantonly claimed, it will not affect the sale, unless its amount was such as to deter bidders. “As to the mortgagor and those claiming under him, they knew what was due. No false claim could affect them, and for the excess for which the property was sold the mortgagor had his recovery.”
In Bowers v. Hechtman, 45 Minn. 238, it is said: “Perhaps there may be cases where the amount claimed to be due would be so excessive and so wholly unwarranted by any thing in the terms of the mortgage as to furnish in itself intrinsic evidence of fraud on the part of the mortgagee, and of consequent prejudice to the owner of the mortgaged premises. But the rule is that claiming in the notice more than is due on the mortgage will not
The rule -may thus be stated: A sale under power for a larger sum than the amount due is valid in the absence of proof of fraud, or that the property or the rights of the mortgagor were injuriously affected, or that bidders were deterred from attending the sale. (Jencks v. Alexander, 11 Paige, 619; Hamilton v. Lubukee, 51 Ill. 415, 99 Am. Dec. 562; Fairman v. Peck, 87 Ill. 160.)
In this case the sums for which, in the aggregate, the property was sold were not only expressly contemplated by the deed of trust, but they were each and all paid out within the terms of the trust for the benefit of the property. If any one of them was a sum not properly chargeable in the notice of sale it was not because it had not been paid, and not because its payment contravened the trust, but solely because of the intervening rights of the beneficiaries under the Burnett deed. But the beneficiaries were not purchasers or encumbrancers for value. The consideration for which they received Mahoney’s interest was a good consideration, but it was not a valuable one. The later payments or outlays by the bank were not optional advances taken by Mahoney and put in his own pocket. They are found by the court to be payments made to be used, and which were used, to pay street assessments and taxes, and to improve the property. They were all for the preservation and benefit, not only of appellant’s security, but equally of the beneficiaries’ interest in the land.
As to the payment of the taxes and other superior liens, it is sufficient to say that appellant could have paid them to protect its security, and held the property for such payments without any express authority. (1 Jones on Mortgages, sec. 358; Mutual Life Ins. Co. v. Newell, 28 N. Y. Supp. 913.) The right depends not upon express contract, but upon the doctrine of subrogation under the general principles of equity. As to many of the other payments, Burnett, as trustee, not only sanctioned and ratified them so far as he had
Nor is it at all apparent that Burnett’s acts in subjecting the interest of his beneficiaries to the terms of the Burr trust deed were in contravention of his trust and void. To make improvements he was authorized “to raise money, by mortgage or otherwise, on said property .... and to pay the same .... out of the rents and profits of the whole of said property, after deducting so much as may be necessary for the support of said children.” The express power to raise money upon the property by mortgage or otherwise is conferred. He could not raise money “ by mortgage on said property” without subjecting the corpus of the property to the lien of the mortgage. The direction for payment out of the rents and profits is not the designation of a fund within the meaning of the cases; it is simply a direction. To hold that the language means merely that, if he desired to make improvements upon the property, he could do so only out of the surplus rents and profits instead of investing them, renders meaningless and inoperative the power to mortgage. If the instrument meant only that, it should—as it easily could—haye been aptly expressed.
But the determination of the main question under consideration is not essentially affected by the interpretation of the Burnett deed. It is apparent that the moneys for which the property was sold were actually disbursed under the terms of the trust; that there was no fraud in the bank’s claim to recover them; that the payment of many of them was requested by both Mahoney and Burnett; that Mahoney and Burnett had actual notice of the amount for which it was proposed to sell the property, and the time of the sale; that the sale was from time to time postponed at their joint request; that they, with this knowledge, undertook to ratify the Burr trust deed until full payment of all indebtedness due from them, or either of them, to the bank.
Moreover, this ground of attack seems never to have been presented in the trial court, and was not raised by the first brief of respondents here filed. The consideration apparently was not in the mind of the chancellor in deciding the case. Usually attacks such as this are made in direct proceedings, accompanied by an offer to do equity. No pleading in the case presents the proposition, nor is any offer made to restore to the bank any of the moneys by it admittedly paid. It cannot, under all these circumstances, be here held that the sale was either void or voidable.
4. The complaint pleaded ownership in plaintiff. The court in very voluminous findings set forth the specific probative facts and circumstances of the transactions of the parties, and went no further. Under its conclusions of law, separately stated, is found this language: “And, as conclusions of law, this court finds: That plaintiff was not at the time of the commencement of this action, or on the twenty-ninth day of December, 1881, or at any other times, the owner or seised in fee .... of the land in the complaint described.” Respondents contend that this is a misplaced finding of fact, and that, not being attacked, it must stand and will support the judgment. In aid of this contention are cited Jones v. Clark, 42 Cal. 192; Breuner v. Liverpool etc. Ins. Co., 51 Cal. 107; 21 Am. Rep. 703; Smith v. Acker, 52 Cal. 217; Bath v. Valdez, 70 Cal. 355; Foot v. Murphy, 72 Cal. 105; Burton v. Burton, 79 Cal. 490; Millard v. Legion of Honor, 81 Cal. 342; and Spargur v. Heard, 90 Cal. 228. Other cases could be added to this list, but an examination of them will disclose that they are alike in their essential features. In each of them the appellant was seeking to overthrow the judgment because of the alleged absence of a finding. A sufficient finding
The statute imposes upon the judge the duty of stating separately his findings of fact and his conclusions of law. (Code Civ. Proc., sec. 633.) The reason is obvious —that the court may examine the facts found and see whether or not they justify the conclusions of law and the judgment supported by them. (Emeric v. Alvarado, 64 Cal. 6030
It is true that ownership may be pleaded and found as an ultimate fact. No reference is needed to the numerous cases so holding. But it is equally true that ownership may be pleaded as a conclusion of law, and may be determined by the court as such a conclusion, and not as a fact. Thus, in Turner v. White, 73 Cal. 299, this court said: “It is perfectly true that in general an allegation that a party is the owner of real property is an allegation of an ultimate fact, and not of a conclusion of law. But, as held in Levins v. Rovegno, 71 Cal. 273, the same averment or statement may be of a fact or of a conclusion, according to the context.” Levins v. Rovegno, supra, is precisely in point. There, as here, the court found, “as a conclusion of law that the defendants are the owners in fee simple,” and this court, after
Still further, if it be regarded as a misplaced finding of fact, or a mixed matter of law and fact which should be treated as a finding, it is, nevertheless, a finding drawn from the special fact of payment. If full authority is not to be given to the declaration of the judge, who, by putting it in the conclusions, holds out that he has reached the result by the application of the law to the facts, at least some weight must be accorded to his action, unless the error is merely a misprision. Treating it then as a finding, it is a finding drawn from the facts previously found. But a general finding, drawn as a conclusion from facts previously found, cannot stand if the specific facts do not support it. (People v. Reed, 81 Cal. 76; 15 Am. St. Rep. 22; Geer v. Sibley, 83 Cal. 4.) The specific facts, as has been shown, do not support it.
For the foregoing reasons the order and judgment appealed from are reversed and the cause remanded.
Garoutte, J., Van Fleet, J., McFarland, J., Temple, J., and Beatty, C. J., concurred.
Harrison, J., deeming himself disqualified, did not participate in this decision.
Rehearing denied.